by Dan Kim — Vice President of Business Development — Ecosystem Listings
Tl:dr. Coinbase reviews thousands upon thousands of crypto tokens. Around 90% are not considered for listing because they don't meet our stringent requirements to protect against scams such as "pump-and dumps" and "rug pulls".
Our threat detection software blocks over 700 tokens that contain malicious software. This can cause serious harm to Coinbase users.
We also do in-depth research to verify that project teams aren't engaging in questionable business practices.
To reach the next 100,000,000 people on web3, it is necessary to make it easy for them to purchase, sell and maintain the most reliable digital assets. This will further cement Coinbase's position as the most trusted gateway to the cryptoeconomy. Users must also be protected.
Coinbase's goal is to list all assets that meet our industry-leading standards of safety, risk, and user protection. We don't list any asset that doesn't comply with those standards.
We only list assets that we have chosen to list, not those that do not meet our standards. We're sure many of you would like to know more about our process for adding assets to our roadmap.
How Coinbase reviews Digital Assets
We review assets based upon applications submitted by project teams to Coinbase Asset Hub as well as thousands of projects that we track across the global Web3 ecosystem.
We don't decide the order we will sequence asset reviews based on how popular or interesting a project is. Our framework is more objective and nuanced and considers factors such as the legitimacy and integrity of contributors, how tokens work, engagement levels and participation levels. Only assets that comply with our strict guidelines for legality and safety, reputation, technical integrability, and reputability will be listed.
The majority of tokens we review are not listed. Out of 100 tokens that we review, around 10 are considered potential candidates for Coinbase Exchange. Fewer than those get approved for listing.
We are sharing more information today about the industry-leading systems, tools and methods that we use to protect users from digital threats.
How our threat detection program keeps users safe
Blockchain technology is always changing, so any asset management system must be able adapt to those changes.
Coinbase's secure traits analyzer is a safety-first threat detection software. It informs us if any token has been designed to harm you or your crypto.
Our software automatically checks tokens on all blockchains that we support and flags any software-related issues (also known as Smart Contract). The secure trait analyzer detects patterns in smart contracts (which are called code signatures) and compares them with our database of code signatures from previous analyzed smart contract. We can distinguish safer tokens faster if we have more smart contracts to review.
Our Listings team has used the automated system to identify more than 700 tokens that did not meet our security standards. This could be due to single individuals being able unilaterally to drain accounts balances or seize funds from users. Our proprietary software also helps us identify dangerous backdoor vulnerabilities, such as those that could be used to pull rug strings in almost all four smart contracts that we have reviewed.
We ask project teams to take appropriate precautions if we find something that isn't safe. We don't list tokens if they don't.
Additional security through extensive research
We do more than just screen smart contracts using our threat detection software. We also perform detailed due diligence to protect our customers.
This includes detailed research into the project's goals, milestones, key contributors and other details to ensure compliance with regulations and identify any possible connections to illegal activity.
We also do on-chain and offline analyses of qualitative and quantitative signals to get a complete view of all assets that we are considering for listing. This includes historical token prices, trading volume, ownership schedules, vesting and ownership schedules, financial history, community sentiment, technical roadmap and information about how tokens were earned, burned and distributed.
Deeper: Protecting users against bad actors
We take additional steps to safeguard our customers against scams, beyond our security review.
We implemented a fraud detection system earlier this year that allows us to detect more potential threats to Coinbase customers. This analysis is designed to assess consumer and business risks. It can be used to identify key contributors who have a history of questionable business practices or allegations of pump-and-dumps.
The Listings team implemented this extra layer of protection and has found nearly 100 projects that have tokens we consider high-risk. We have decided not to list them.
Coinbase is the trusted platform to buy, sell, and exchange digital assets. Although we strive to list as many assets legally possible, our primary goal is to protect our users. We have invested a lot in tools and processes to eliminate risky assets and will continue to work towards protecting all Coinbase users.
How Coinbase Protects Users from Risky Assets was first published on Medium's The Coinbase Blog. People are responding to the story by commenting and highlighting it.
Title: How Coinbase Protects Users From Risky Assets
Sourced From: blog.coinbase.com/how-coinbase-protects-users-from-risky-assets-342a6bd63763?source=rss—-c114225aeaf7—4
Published Date: Fri, 02 Sep 2022 13:59:10 GMT